Shares of Eli Lilly (LLY +2.37%) have risen 400% over the past five years. Novo Nordisk (NVO +1.25%) rose just 20% over the same span and is down 60% from its 2024 high. Pfizer (PFE +0.23%) has fallen 33% over the past five years and is down 50% from its 2021 high. If you are looking at Eli Lilly, you may want to step back and think about the upside opportunity offered by Novo Nordisk and Pfizer instead.
The problem with Eli Lilly
There's no question that Eli Lilly is doing very well as a business right now. The company's GLP-1 weight loss drugs are growing at a shocking rate. In the first quarter of 2026, sales of Mounjaro and Zepbound increased 125% and 80%, respectively. And management is prudently using the windfall from these two drugs to strengthen its drug pipeline. This is exactly what you would want to see, so there's nothing wrong with the business.
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The problem with Eli Lilly is the stock's valuation. The stock's price-to-earnings ratio is 34x. While that's down from the five-year average of 56x, it is far above the pharmaceutical industry average of 23x. Investors are still pricing in a lot of positive news for Eli Lilly, which makes struggling Novo Nordisk and Pfizer look like they have much more upside potential.
Novo Nordisk is catching up
Novo Nordisk was the first to market with a GLP-1 drug, but Eli Lilly's entrants proved more effective. That allowed Eli Lilly to pull ahead in the new, fast-evolving pharmaceutical niche. But Novo Nordisk just beat Eli Lilly to market with a GLP-1 pill, and the pill has quickly gained traction, with 1.3 million prescriptions in the first quarter following its launch. The big story, however, is that Novo Nordisk's GLP-1 pill appears to have a greater impact on weight loss than Eli Lilly's recently launched pill.
NYSE: NVO
Key Data Points
That suggests Novo Nordisk could regain share in the GLP-1 space. In fact, the success of the company's GPL-1 pill was so strong that the company increased its full-year 2026 guidance. Meanwhile, the shares offer a very attractive 4% dividend yield. By comparison, Eli Lilly's yield is a miserly 0.7%. Notably, Novo Nordisk's payout ratio is a very reasonable 40%. Conservative dividend investors looking for a turnaround stock should probably do a deep dive.
Pfizer isn't even in the race... yet
If GLP-1 drugs are the main event, then Pfizer hasn't received an invitation to the show yet. It had to drop its GLP-1 drug candidate, which further increased investor concerns about the company's upcoming patent expirations. However, the company has a long and successful history and remains an industry-leading drug maker. It quickly pivoted, acquiring a company with an attractive GLP-1 drug candidate. And it has oncology and migraine drugs in the works, as well.
NYSE: PFE
Key Data Points
Drug development efforts and patent expirations don't always line up perfectly. Given enough time, Pfizer will likely get back on track. That should prompt investors to return to the stock, pushing the price higher. Meanwhile, the dividend yield is a lofty 6.5% for those willing to take on more risk. The payout ratio is above 100%, but management states that its goal is to maintain it in the short term and to start growing the dividend again over the long term.
Too much love versus too little love
Wall Street has a bad habit of piling into a good story, pushing valuations to extremes. That appears to be what is happening with Eli Lilly right now. Long-term investors should probably tread with caution. A better option might be Eli Lilly and Pfizer, both of which are deeply unloved. There are reasons investors are avoiding these two drug stocks, but the negative sentiment may be overdone. And that suggests they could have more upside than already-richly priced Eli Lilly.
